The NHL's Most Valuable Teams

New York Rangers Right Wing Rick Nash (61) takes the puck into the Carolina zone during the third period of a game on Dec. 1 at Madison Square Garden in New York, NY. (Photo by David Hahn/Icon Sportswire via Getty Images)

NHL team values are up 15% over last year to an average of $594 million, the biggest increase in three years.

Deal-making in and out of hockey has been a boon to the NHL, most notably the $2.2 billion sale of the Houston Rockets (NBA), the $1.2 billion price for the Miami Marlins (MLB) and the $500 million expansion fee paid by the NHL's Vegas Golden Knights. These three deals illustrate the willingness of buyers to pay ever-increasing revenue multiples for big-market, profitable teams (over eight times for Rockets), medium-market, money losing teams (almost six times for Marlins), and new teams in untested markets (likely over three times this season's revenue for the Knights).

The NHL has also benefited from its 2015 deal with MLBAM, in which baseball's internet and technology arm purchased the rights to distribute hockey's live out-of-market games and the NHL got just under a 10% stake in BamTech (technology and streaming services). In 2016, ESPN's purchase of one-third of BamTech valued it at $3 billion. ESPN's acquisition of a controlling stake in BamTech this year valued it at $3.75 billion.

Higher team revenue (general gate, premium seating, television, advertising) and profits (excluding the Knight's expansion fee, worth over $16 million to each of the 30 preexisting teams) also boosted values. Average revenue for the 2016-17 season increased 8%, to $148 million. Operating income went up 20% over the previous season, to an average of $18 million (Note: all figures are in U.S. dollars). The seven Canadian teams were also assisted by a 6.7% increase in the value of the Canadian dollar versus the U.S. dollar from the 2015-16 season to last season.

The New York Rangers are the NHL’s most valuable team, worth $1.5 billion. This is the 19th edition of Forbes’ NHL valuations and the third consecutive year the Rangers have taken the top spot. Last season, the Rangers had more revenue ($246 million) and operating income ($94 million) than any other hockey team.

The Toronto Maple Leafs, worth $1.4 billion, usurped the Montreal Canadiens ($1.25 billion) for second place. Maple Leaf Sports and Entertainment, which owns the Leafs and NBA’s Raptors, inked a 20-year, $640 million arena naming rights deal with Scotiabank--the richest in sports. Viewed through the lens of a financial arms race, the MLS&E deal best compares with the sponsorship deal Madison Square Garden inked with JPMorgan Chase in 2010, which is worth $30 million a year.

The $500 million fee paid by the Golden Knights to become the NHL's 31st team this season as a base line for the value of hockey teams illustrates the league's enormous financial success as it has grown from six to 31 franchises (see table below).

Forbes

The price of entry.

The inflation-adjusted price of admission to the NHL has increased at a 7.4% compound annual rate since 1967 when compared with the Knight's $500 million fee. The next round of expansion, 1970, has had the poorest return--5.8%. And the most recent two expansions (1992, 1997) before the Knights are tied for the best returns (7.7%). Average for the nine expansion years: 7%.

In contrast, net of inflation, the S&P 500 has posted annual price appreciation of just 2.5% since 1967 and 5.6% including dividends. Existing owners share in the expansion fee equally. Part of the return they earn on their team are future expansion fees.